A client briefing me recently ahead of a strategy forum cautioned that they were a tough audience. Exposed to an array of corporate leadership development programs over the years, with a lot of capability in their respective fields, the challenge was to fully engage them in the search for fresh possibilities.
The reality is that most strategic conversations do not take place under ‘crisis’ conditions but somewhere along a spectrum of change dynamics. And where you sit on the spectrum influences your process design.
At one end of the spectrum, executive management understand the strategic context and have strategies in play. Under these conditions, the purpose of the strategic conversation is largely one of ‘recommit’. The executive need to re-engage in the conversation, test that their understanding of the environment remains on the mark and is shared across the ExCo, and that the strategies in play can withstand pressure testing.
Under these conditions Mintzberg’s advice of 30 years ago remains sound: most of the time executives should remain focused on refining and improving execution. But he also cautioned: the real challenge of strategy lay in the ability to do this whilst simultaneously remaining alert to the subtle discontinuities that can threaten the business.
At the other end of the spectrum is crisis, often borne of serial underperformance – think Woolworths, Myers. Hamel ironically suggests our model of transformation under crisis mirrors the experience of poorly governed third world dictatorships: pressure mounts, crisis, leader deposed. He argues this change model is too expensive: it’s infrequent; belated; convulsive. In the 90’s IBM went from making $6B to losing nearly $8B in 3 years: it took another 4 years to return to its earnings to their previous highs.
Typically the process occurs under a new CEO who has no ownership of the existing strategies and has Board support for a no-holds barred review. Mobilising teams in this environment is relatively straightforward. The ‘burning platform’ metaphor is over-used, but it suits these conditions. The goal of the strategy process under crisis is a complete ‘rebuild’
Between these poles is a boggy middle ground typically characterised by a general sense by ExCo or a senior executive of the need to ‘do something’: due to either an incipient shift in market dynamics, or a general unease with performance. In strategy, Porter warns of the risk of being ‘stuck in the middle’. This is true also of the strategy process. The goal here is strategic ‘renewal’.
Hamel describes three external drivers of strategy decay that should drive renewal: replication (is our strategy still distinctive), supplantation (is our strategy being superseded by external changes), and evisceration (is power shifting to our customers). Internally, Hamel talks about exhaustion, but I prefer Rumelt’s notion of 'organisational entropy'. What’s entropy? It’s the tendency of systems toward disorder in the absence of deliberate injection of energy into the system. Think teenager’s bedroom. Without intervention – energy – it quickly becomes a mess! Entropy!
The challenge in this middle ground is to identify these trends early enough, and then to be able to mobilise the organisation to move before it becomes a crisis.
What does this mean for your organisation? Before you next embark on a strategy process, ask yourself where you sit on the spectrum: are you confident enough to opt for ‘recommit’; do you need ‘renewal’; or are you confronting a crisis that demands re-build. Each of these strategic contexts has its own challenges:
- For recommit: ask yourself how deeply have you challenged the assumptions that underpin your strategy? And is execution pushing ahead as quickly as you would like? If not, what are you really going to do differently?
- In crisis: focus on the big calls. Will you stay or go? How quickly can you turn it around? Don’t worry too much about the second order issues. If you get the big calls right, there will be time enough to come back around and clean up. And the market will be forgiving if they see evidence that the you are delivering on the big calls.
- In the middle: renewal. Challenge your team to dream big. Our greatest risk is not over-reaching but delivering a strategy that is underwhelming. In her handbook on growth Leidtka argues that great design starts with the question, “what if anything were possible?” This is a good starting point for renewal.
Let me finish where I began. I opened the workshop with an exquisite video clip from Cirque du Soleil (watch here). Cirque du Soleil performers are all world class in their chosen disciplines before they join Cirque. But they open themselves to greater possibilities. They expose themselves to being less than world class as they learn new skills. Their artistry comes now not from their own world class talents, but from connecting their talents with world class choreography, world class set design, world class videography. And in doing so, individually and collectively they reach new heights.
This is also the basis of a capabilities-based strategy – but that’s for a later blog.